RMA: Investing into residential property

Transcription of Finance News Network Interview with Rental Management Investment Trust (ASX:RTI) Chief Investment Officer, Stuart Bell

Joining me from Rental Management Investment Trust is Chief Investment Officer, Stuart Bell. Stuart welcome to FNN.

Stuart Bell: Thanks for having me.

Rental Management Investment Trust is focused on investing in the Rental Management Australia Fund (RMA Fund). What are the Fund’s main objectives?

Stuart Bell: Sure, the RMA Fund is an unlisted stapled investment. $5 invested in the Fund receives four units in the Rental Management Australia Trust and one share in the Rental Management Australia Group.  Its main objective is to assist in the acquisition of the RMA Group and the RMA Group, is aiming to become one of the leaders in the provision of residential property management.

Could you outline the process of residential property management?

Stuart Bell: Yes, residential property management is simply looking after a rental property for the owner to generate a return on his investment. It involves finding suitable tenants, collecting and distributing rent to the owner and maintaining the property.

Now as you mentioned returns, what sort of returns would an investor be expecting from investing in the Trust, and how are the returns derived?

Stuart Bell: An investor in the RMIT or the Residential Management Investment Trust can expect to receive a distribution of approximately 9.25 per cent per annum from interest received by the RMA Trust, and distributed to the RMIT. An investor may also receive dividends from the property management company, which could be substantial as it grows.

RMA has just inked a deal with Run Corp Limited (ASX:RNC) to purchase its property management business. What plans have you made to integrate Run Corp’s property management business into your own?

Stuart Bell: Yes the RMA Group has entered into an agreement to purchase through residential property management business from Run Corp. It’s for a stage payment of $65 million, partly in cash and partly in securities. Run Corp’s business will be easily integrated into the RMA Group, as both uses the same computer system and most of the staff will be kept by the RMA Group. The acquisition of Run Corp will make the RMA Group the largest residential property management group in Australia, with approximately 17,000 properties under management, and approximately one per cent of the Australian market.

Right, now turning to your ASX listing. What is your issue price and what market cap does that put on Rental Management Investment Trust?

Stuart Bell: The issue price of the Trust is $1 per unit with a free attaching option, the minimum subscription being $15 million and it should be listed by mid-December. There’s no maximum, it’s pretty much an open-ended amount, so the market cap will be dependent on the amount of units subscribed for.

So finally Stuart, what milestones will Rental Management Investment Trust be aiming to reach beyond next month’s listing?

Stuart Bell: The major milestone in the short term is to complete the whole of the Run Corp transaction and increase the number of properties under management to 75,000, within five years. And that would be roughly 3.5 per cent of the total market, which is not that unrealistic.

So Stuart Bell, thank you for the introduction to Rental Management Investment Trust.

Stuart Bell: You’re very welcome.

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